Until recently, compound judgment interest was only available in rare circumstances, namely where courts exercised their equitable jurisdiction. Simple interest was the ordinary measure awarded by the courts. However, in Bank of America Canada v. Mutual Trust Co. the Supreme Court of Canada stunned Canadaʼs legal theorists and practitioners by holding that compound judgment interest could be awarded at common law. It was the firm belief of Major J. that such relief was necessary to protect the full time value of money owed to judgment creditors. This paper considers the hidden implications of the decision. Attention is given to the Supreme Court of Canada’s ambiguous use of restitution principles in awarding compound interest. The context of the case suggests that the Court was possibly referring to disgorgement, a type of restitution. However, neither the terminology used, nor the circumstances of the case clarify whether this was the Courtʼs true intention. Additionally, Major J. decided to limit the use of restitution principles in cases of contract breach (where it traditionally was unavailable) to those involving inefficient breaches. The uncertainly with regard to the extent of this limit is examined. Finally, consideration is given to the possibility of contract rights attaining the status of property rights through the Court’s apparent use of disgorgement principles.
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Geoffrey Robert Cobham, "Calculating Judgment Interest after Bank of America Canada v. Mutual Trust Co.: Difficulties Compounded" (2004) 13 Dal J Leg Stud 65.